Tesla Plummets 14% In Stock's 11th-Worst Day Ever As Musk's Feud With Trump Escalates

Tesla shares plummeted over 14% after Elon Musk publicly criticized President Trump's policy bill, leading to a sharp rebuke from Trump and sparking investor concerns about potential repercussions for the company. The stock's decline, representing its 11th-worst trading day since its IPO, erased $25.5 billion from Musk's net worth. Wedbush analyst Dan Ives noted the "major beef" between Musk and Trump as a key driver of market fear, while broader concerns exist regarding declining Tesla sales in key international markets.

Analysis

Tesla's (TSLA) stock experienced a significant downturn, falling 14.2% to $284.70 on Thursday, marking its 11th-worst single trading day since its 2010 IPO, according to FactSet. This sharp decline, which at one point exceeded 17%, is primarily attributed to the rapidly deteriorating public relationship between CEO Elon Musk and President Donald Trump. Musk's multiple criticisms of Trump's policy bill on X, labeling it "massive, outrageous" and "pork-filled," prompted Trump to suggest Musk might be suffering from "Trump derangement syndrome" and question the future of their previously "great relationship." Wedbush analyst Dan Ives characterized this escalating conflict as a "jaw dropping" event creating "major fear for Tesla investors." The market reaction, reflected in a strongly negative sentiment for TSLA (-0.85), erased approximately $25.5 billion from Musk's net worth. This political turmoil adds to existing operational concerns, notably a significant decline in Tesla's vehicle sales in May across key international markets: the U.K. (down over 45%, while the overall U.K. auto market grew 28%), Germany, Italy, and China. This contrasts with a 22% stock jump in May when Musk committed to serving as Tesla's CEO for the next five years after leaving a White House advisory role. Compounding these issues, Tesla is set to launch a robotaxi service with around 20 Model Y vehicles in Austin, Texas, in June, even as its Autopilot and Full-Self Driving software face multiple National Highway Traffic Safety Administration (NHTSA) investigations and criticism over a lack of detailed safety data disclosure.

Key Decisions for Investors

• Closely monitor the evolving public discourse and relationship between Elon Musk and President Trump, as further antagonism could introduce additional stock volatility and potential policy-related headwinds for Tesla.
• Scrutinize upcoming sales reports from key international markets, particularly the U.K., Germany, Italy, and China, to ascertain whether the May declines signal a persistent downturn impacting Tesla's fundamental growth narrative.
• Evaluate the launch of the Austin robotaxi service as a potential long-term growth catalyst, while remaining cognizant of the significant regulatory scrutiny, safety concerns, and potential liabilities associated with Tesla's autonomous driving technology.
• Assess the risk that Elon Musk's prominent involvement in political commentary and other non-Tesla ventures may divert management focus or continue to negatively influence investor sentiment and the company's valuation.